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The digital world moves incredibly fast. Embracing APIs as a key strategy for optimizing internal software development was big news not too long ago. Now, it's all about external-facing APIs and the quest for monetization.
Companies quickly realized that the APIs their in-house developers build to solve internal challenges would likely have value for developers in other organizations as well — and the path to monetization became clear. Today, businesses across all industries are creating new revenue streams by extending their products and services via API-enabled partnerships. And, independent developers are getting in on the game as well, building APIs specifically for revenue-generation purposes.
The Monetization Trend
According to the 2022 State of APIs Report, an increasing number of organizations are embracing the idea of monetization. Overall, API monetization in 2022 increased 5% from previous years. Within the financial sector, it rose by 16%.
The benefits for organizations are clear:
■ Revenue potential: Monetizing APIs enables companies to drive additional revenue.
■ Engagement and loyalty: By monetizing APIs, organizations can encourage customers to use their API to build new applications and services, which can lead to increased engagement and customer loyalty.
■ Partnerships: API monetization can create opportunities for businesses to form partnerships with other companies and third parties.
■ Competitive advantage: By adding revenue and increasing engagement and partnership opportunities, companies can gain competitive advantage.
Why It Matters for Developers
Developers are interested in API monetization, too, for a variety of reasons. Independent developers are embracing API monetization as a pure-play earnings opportunity.
Within organizations, developers are keen to monetize their own APIs because it provides their companies an opportunity to increase revenue and support further development and growth. Monetization across the industry also makes a wider range of APIs available for developer use, thus enabling them to build new applications and services that leverage existing data, services, or functionality — instead of having to build everything from scratch.
What to Expect Along the Way
Regardless of where a company or developer is along the path to monetization, there are some key considerations, and making monetization part of an API management approach requires effective planning and strategies.
Some of the questions companies and developers should ask themselves include:
■ Where will I sell my APIs?
■ What tools do I need on the backend to process API transactions?
■ How will I communicate with my API users?
■ What documentation do I need to provide about my API?
■ Do I have to worry about governance and usage issues?
■ How will I ensure brand consistency across my API offerings?
■ How do I handle ongoing API support and maintenance?
■ Will developing these capabilities to support API monetization slow down time to market for my APIs?
The complexity around API monetization is real. Companies cannot jump into the monetization game without first preparing their marketplace and back-end platforms to handle — and, hopefully, scale — API purchases and transactions.
Many organizations are opting to use pre-existing API hubs over building their own capabilities for these reasons. Choosing a ready-made digital API storefront can save organizations valuable time in getting to market with their APIs. This approach also frees developers from being involved in logistical concerns around monetization and instead enables them to focus on optimizing the quality of the APIs and the infrastructure supporting them.
When evaluating where to park your API monetization program, these functionalities should be top priorities:
■ Quick and efficient onboarding process
■ Flexible, customizable, easy-to-use hub for sharing and monetizing APIs
■ Support for all API protocols and API types
■ Flexible, tiered pricing models
■ Full ownership of the payment process
■ Branding capabilities
■ Governance and linting features
Making the Move Effectively
Developers and businesses planning to embark on monetization can do so effectively as long as they plan in advance and pick smart tools. Whether the priority for the organization is to boost revenue, forge greater engagement with the developer community or increase third-party partnership opportunities, the overall API monetization effort is key.
It's essential to create or select a centralized API hub that enables monetization with speedy time to market as well as full capabilities for supporting API transactions, documentation, communication, usage issues, and brand identity.
This comprehensive and holistic approach will pay dividends, as the emphasis on achieving competitive advantage through API monetization will only continue to grow.